We extend the benchmark model of Aghion and Blanchard (1994) assuming two segments of the emerging private sector that differ in workers' productivity. We look at the paths of employment, wages, taxes, labor costs and profits during and after the transition, up until the shock is fully absorbed....

We extend the benchmark model of Aghion and Blanchard (1994) assuming two segments of the emerging private sector that differ in workers’ productivity. We look at the paths of employment, wages, taxes, labor costs and profits during and after the transition, up until the shock is fully...

As a consequence of the economic recession and the loss of the East- European external markets there was an extremely high increase in unemployment in Hungary in the early 1990s. At the same time the structure of the unemployed staff changed. In addition to the mainly uneducated and unskilled...